In the UK, the budget deficit has fallen, but still stands at £96 billion. The US deficit has also fallen, but was $680 billion in the 12 months to September 2013. A key part of government strategy is to manage the challenging issue of the growing cost of welfare benefits. If governments decide to reduce eligibility for state benefits, then increasing the take up of insured protection products will allow people to be protected against the financial misery of sickness, disability, unemployment and death.
INNOVATIVE SERVICES HELPING EMPLOYEES
Our Group Protection business provides protection-based employee benefits. We are a market leader in important areas such as workplace rehabilitation. This helps our corporate partners reduce costs and improve efficiency, as well as benefiting from reducing staff absence costs. Interest in our proposition soared as we combined our two corporate business operations to respond more effectively to auto-enrolment.
- We introduced our online ‘quote and buy’ system in February 2013, which provides quotes for smaller employers in as simple a way as possible
- We strengthened our relationship with ‘Rethink Mental Illness’, helping our customers to improve stress management and understand the signs of stress and mental health issues
- We extended the employee assistance programme. This free, preventative programme of information, advice, training and services helps employees deal with events and issues in their everyday work and personal life
- We extended our free innovative online health assessment tool, ‘healthy living’ that helps assess and monitor employees health
- We also offer a ‘prehabilitation’ service to help employers reduce stress in the workplace. Even though 428,000 people in the UK had work-related stress in 2011/12, 40% of employers are doing nothing to address the problem of stress.
PROTECTION PROVIDER OF THE DECADE
“Once again, we have been widely recognised across the insurance industry as an outstanding provider of protection products and service.”
DUNCAN FINCH, MD, PROTECTION
We held the number one position in UK retail protection for each of the last 10 years. This doesn’t just mean customers chose to buy our products more often than our rivals, but that we’re recognised by industry bodies and intermediaries as best in class for the products and the service we offer our customers. Confirmation came in the huge number of accolades we won from around the industry. In 2013 we won:
- Protection provider of the decade, LifeSearch Awards 2013
- Outstanding organisation of the decade, Protection Review Awards 2013
- Best protection service, Investment Life & Pensions Moneyfacts awards 2013
- Best life insurance provider, What Mortgage Awards 2013
- Protection provider of the year, SimplyBiz Annual Provider Awards 2013
Understandably, we’re especially proud to be seen as the best protection provider of the last decade, a testament to all the hard work, technical excellence, inspirational strategy and strong leadership that we’ve delivered over the last 10 years. Special praise is due to the four managing directors of our retail protection business over that period: Simon Gadd, Bernie Hickman, Peter Graham and Duncan Finch.
A BETTER CUSTOMER EXPERIENCE
2013 saw our Retail Protection business consolidate its market leadership with a continuation of the high levels of innovation seen in recent years. Our customers have the benefit of better service, lower cost and improved terms on products such as critical illness cover.
We made our life cover application questions easier to answer, which will give customers more confidence and reduce the time it takes to buy a policy. We already have a strong online proposition and now we have improved our online acceptance rates even further. We increased the percentage of customers that can buy online without needing to provide extra medical evidence from 78% to 81%. This enables us to compete effectively in the online aggregator market where we are a major player.
We will support industry initiatives to simplify protection products, making it easier for people for buy online and understand what they are buying. This is crucial in building and maintaining customer trust and confidence. Our own net promoter scores and customer service scores are strong. A simple and understandable buying process is essential for good claims management. We are delighted therefore that our pay-out ratios are 98% for death claims and 93% for critical illness cover.
A RECORD YEAR FOR GENERAL INSURANCE
Our general insurance business saw increased profits and a combined operating ratio of 84% as we benefitted from benign weather. Even when we needed to react to the storm and flood events at the end of 2013, our innovations in claim handling radically improved the speed of claims resolution. These changes improve the costs of claims handling whilst driving up levels of customer satisfaction. We consolidated the success we had in 2012 with our innovative lifestyle cover insurance plan, which is a short-term income protection insurance policy, designed to help people maintain their income due to accident, sickness or unemployment.
We also entered an agreement to supply our customers with motor insurance through a panel, in partnership with BGL. We are already arranging about 1,000 policies a month. Helping our customers with their motor insurance needs can mean we have a more complete view of their insurance product holdings and enables us to fill any gaps.
DEADLINE TO THE BREADLINE
If a household’s income suffers an unexpected shock and suddenly stops, their money would run out in 26 days on average. For working age families, the deadline is reached at only 11 days. Yet a 2013 study showed that only 50% of adults in the UK have life insurance.
Our ‘Deadline to the Breadline’ report shows the precarious nature of UK families’ finances. A startling fact is that the average amount of UK savings is just £1,010. Yet people estimate their savings would last for 72 days, well over twice the actual deadline. And it would take the average UK household just under 13 years to save enough money to cover their annual gross salary of £27,000.
DRIVING GROWTH IN US PROTECTION
Our US protection business increased its market share, becoming number three in ordinary life coverage, higher than many more well-known US insurers. We improved sales and delivered cost reductions. On 1 November 2013, we achieved the milestone of having one million customers.
Historically, around 70% of our issued policies have been in our better rate classes. However, our underwriting capabilities extend across all rate classes. We base our overall focus on evaluating the entire risk and giving distinctive customer service.
LGA has achieved success through digital innovation, while remaining committed to the intermediary market. Sales are made through marketing groups with approximately 400 member agencies plus almost 75 other independent brokerage general agencies, giving us contracts with approximately 100,000 brokers.
Adverse mortality, weather and other catastrophic events remain key risks in our protection business. Pricing and using reinsurance to manage significant exposures are core capabilities.
UK LIFE PROTECTION GWP